In most commercial contract situations, a breach of contract lawsuit is straightforward. If an entity contracts to receive compensation in exchange for performing certain services, and it receives no compensation even after performing its promised services, it may have a breach of contract case. In one recent case, a Florida marketing firm was in that situation but was not able to pursue a breach of contract case in the Florida courts because one of the entities that was an essential party to resolving the case was the government of Argentina, and federal law states that governments like Argentina’s are immune from suit, leaving the Third District Court of Appeal to affirm a dismissal and the firm unable to pursue its case.

The marketing firm, GMI LLC, inked an agreement in early 2007 with the body that governed football (a/k/a soccer to U.S. audiences) in Argentina. The one-page contract gave GMI exclusive rights to the marketing, negotiating, and execution of a deal that would cover the sale of the football association’s media rights for a two-decade period, starting with the 2014-15 football season. The agreement stated that the association would not pay GMI, but the association and the buyer of the media rights would reach their own agreement regarding GMI’s compensation, and the buyer would pay the marketing firm.

One of the entities to which GMI attempted to market the media rights was the Argentine government. GMI worked to broker the deal, setting up several meetings with various Argentine officials. Eventually, after getting the “green light” from the Argentine president to pursue purchasing the media rights, the government officials began meeting with the association without GMI involved. In 2009, the government and the association agreed to a 10-year partnership in which the association assigned its media rights to certain governmental agencies.

Now cut out of the deal and left receiving no compensation, GMI sued the association for breach of contract. The marketing firm alleged that the association failed to perform under the agreement, intentionally cutting GMI out of the negotiated agreement and failing to pay compensation it knew was owed to the marketing firm.

GMI might seem, on the surface, to have a viable case. It performed certain services to broker a deal, as it promised in the 2007 contract. In exchange, it was supposed to receive compensation, but it got nothing. However, the association sought and obtained an order from the trial court dismissing the case. The appeals court affirmed that dismissal.

So, what went wrong with GMI’s case? It came down to the entities involved. GMI had asserted, in its court filings, that it was seeking damages and compensation against the association only and was not pursuing the Argentine government in any way. GMI was consciously avoiding including the Argentine government in its lawsuit because, under the Foreign Sovereign Immunities Act, Argentina was completely immune from suit.

However, the marketing company’s efforts to leave the Argentine government out were not enough, due to the rule of “indispensable parties.” An indispensable party is a person or entity whose interest in the case makes it impossible to completely resolve the lawsuit “without affecting either that party’s interests or the interest of another party in the action.” The rules of civil procedure state that a defendant can ask a court to dismiss a case if the other side failed to include an indispensable party in the case.

In GMI’s situation, its 2007 contract stated that it would be paid by the buyer of the media rights, which, in this circumstance, was the Argentine government. GMI accused the association of working with several governmental entities to complete the media rights sale directly between the government and the association, cutting out GMI.

Under this theory of the case, the association and the Argentine government were partners. As a result, the court reasoned, any decision a Florida court made regarding the proper amount of compensation owed to GMI for its marketing efforts would necessarily affect Argentina’s interests. This made Argentina an indispensable party, and the FSIA said that Argentina could not be sued. That left GMI with a case it could not pursue.

When you believe that someone with whom you’ve crafted a commercial contract is in breach of that agreement, pursuing a breach of contract lawsuit may be one possible option you have. To help you assess all of the options that are (or are not) available to you, talk to the skillful Florida commercial litigation attorneys at Stok Folk + Kon. Our attorneys have many years of experience advising and representing parties in a wide array of commercial litigation situations.

Contact us online or by calling (305) 935-4440 to schedule your consultation.